Oil companies experienced record profits in 2022 as oil prices soared. Revenues for the largest integrated European and American oil companies nearly doubled in 2021, leading to a significant increase in profits.
However, this financial success has sparked backlash from consumer advocates and political leaders.
“Oil companies’ record profits today are not because they’re doing something new or innovative,” President Joe Biden said on October 31.
“Their profits are a windfall of war — the windfall from the brutal conflict that’s ravaging Ukraine and hurting tens of millions of people around the globe.”
The industry disputes the portrayal of oil companies as greedy war profiteers.
“You continue to hear this administration talk about the need for more supply, but they propose windfall profits taxes or accuse us of price gouging, or they lock up federal lands for oil and gas development,” said Frank Macchiarola, senior vice president of policy, economics, and regulatory affairs at the American Petroleum Institute.
“They talk about the need for permitting reform and more infrastructure, but then they turn around and cancel pipeline projects.”
While oil companies profited immensely in 2022, their fortunes are closely tied to the price of oil — when it falls, so do their profits.
They are also preparing for a future where the demand for oil is expected to decline, a trend they themselves are forecasting.
